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Monday, 22 April 2013

South Metropolitan Gas Company

The profit sharing scheme which South
Met. inaugurated in 1889 was only one of a series of remarkable events in which
the company had been involved since the early 1860s when George Livesey had
first become sole manager. Before this time the company had pursued a line -
unique in London - in which can be seen the roots of Livesey's policies. Under Livesey South Met.'s role was directly concerned with the gas
industry's relationship with central and local government.

Even
before George Livesey had become an employee of the Company, it was
trying to answer criticism from 'consumers' and to do
so by means of voluntary action. In the 1880s George
Livesey was able to put forward ideas and policies which were the results of policy
decisions taken in the 1840s as a way to meet public criticisms. However
flamboyant George Livesey's approach might be, he can be seen in essence to be
following policies laid down fifty years before by his father and the Board of
the late 1840s and 1850s.

George Livesey's father, Thomas, went to
work for South Met. as their clerk in 1839. The Company had had a fairly
unstable history up to then. It had been founded to compete with the Phoenix
Company in the late 1820s, and to supply cannel gas (gas made with a coalgiving a clearer light - but more expensive). The
works was built at the very edge of South London, on the banks of the Surrey
Canal between Peckham and Deptford. The early minute books, in so far as they
exist, are filled with scandals and disputes - the first Managing Director
described as 'a questionable character'.

In 1836 the works was partly destroyed
by a major explosion in the course of a dispute on patent rights with the
Engineer, George Holsworthy Palmer.

The Board was reconstituted in 1839 under the Chairmanship of
Alderman Farncombe, a prominent City figure, wharfinger and future Lord Mayor.
From that time the Board was dominated by a few families.

In the 1880s the major
shareholder was Richard Foster, whose family had occupied Board positions since
the start of the Company. Foster himself had held shares since the 1820s and
although never he never took on Board membership he championed Livesey's his actions, however controversial,
against Board decisions. The Company minute books abound in instances in which
a Board decision against Livesey would be answered by a letter from Foster,
backing Livesey's.

Another important element of
Company policy involved a strong bodyof Christian belief among some members of the Board. At management
level this was shared by Thomas Livesey and led the company from the
early 1850s to promote a welfare policy for its workforce. The roots
of co-partnership lie in maintaining the welfare of
employees, and thus buying their co-operation, efficiency could be maintained,
and price kept down.

By helping the workforce materially they
could be morally influenced, which it was hoped would persuade
them away from forces outside the Company. 'Loyalty - was at a premium -
loyalty to the idea of the Company as a good and giving body. If the industry's
existence was to be threatened then the workforce must be enlisted as
supporters lest they shouldally with the Company's
enemies and undermine it.

Public criticism was
about keeping prices down. This policy had evolved between 1842 and
1871 and had been helped by keeping capital low. Bypaying low dividends on capital, profit could be reinvested in works
and maintenance: as profit rose there was less capital to service through
dividends and therefore more money to re-invest. A company with high profits
and low capital could afford to lower prices and still maintain quality.

Thomas Livesey had come to South Met.
from a clerkship with the Gas Light and Coke Co. He was not a technician but an
administrator and the nephew of another Thomas Livesey who had been responsible
for the formation of administration at Gas Light & Coke Co., in its
earliest years. George's uncle William, was a Parliamentary agent working for
gas companies and an expert in gas legislation. George thus had powerful
influences and a background of great expertise in gas affairs on which to
build.

Thomas Livesey and his family lived in a
cottage alongside the works in the 1840s and he worked under the
direction of the Board which never gave him the freedom that it was eventually
obliged to give his son. Once he had established his position in office he was
trusted by the Board who praised his work frequently. He was the only management level
officer of the Company, and as George grew up he began to take over the
technical management from his father.

So - in 1839 the Company had £80,000 invested
in what was now a mainly useless works. Until 1849 a dividend of less than 2%
was paid but in reality a profit of 10% had been made since 1842 and this
balance was re-invested in equipment. In 1856 the then Chairman said
that 'it is in the best interests of the concern to keep capital down and
therefore to use it to extend the works' . In the 1880s George Livesey could boast that the building
of the massive new works at East Greenwich ‘had been entirely financed from
running profits. As consumer agitation grew in the 1840s and 50s the Board began to reduce prices to pre-empt local authority
criticisms.

In 1860 the Chairman said that 'in order to satisfy the people we have reduced the
price of our gas 4d. per 1,000 - we are not compelled to reduce the price.' The
Company began to enjoy a remarkable reputation with the local authorities whose
areas it served. It had been founded to compete with the Phoenix Company and
the Surrey Consumers Company and its
prices were lower than either. In 1850 the Camberwell Vestry could say that
they were 'quite happy with the South Met. - they had never heard a single
complaint' and in 1875 a petition from Camberwell to the Metropolitan Board of
Works said in part; 'this parish is supplied with gas by the South Met. which
by reason of its small capital and good management has been for many years
enabled to supply to its customers 14 candle gas at 2/ld. per cubic foot ...
your honourableboard will take such steps as are necessary to maintain the
privilege now derived from being supplied by the South Met.'

Such praise was not being given to other companies in London and in the 1880s
Camberwell was to lead a deputation protesting to the Board
of Trade that South Met, must not be contaminated by those other
Companies whose prices were not all the local authorities desired.

It had been said of Thomas Livesey that
his ambition was to 'take the lead'. This lead was defined by George Livesey in
1875 as: 'the lead of the London Gas Companies as to price - the lower the
price the more secure the property and the investment'. This
statement also shows Livesey's ambition that South Met., was to be the best company
and show the
way as to how gas companies should be run.

In 1839 South Met. was small and
failing, it was the ambitions of the Liveseys, father and son, which, took it to
pre-eminence in world terms by 1900.

'Consumer' agitation in Southwark in the
1850s was led by John Thwaites, later Chairman of the Metropolitan Board of
Works. George Livesey in later years described how as a teenager he had
attended meetings agitating for change: 'I remember quite as a youngster
attending a public meeting and hearing Sir John Thwaites speak .... if the
companies had been reasonable and reduced [the price of gas] it by 1s. to 5s. I
think it would have stopped the agitation'.

So some of Livesey's earliest political
impressions concerned these meetings which called for changes in gas company
policy in the public interest. The meetings were lively ones and an early
Journal of Gas Lighting published a letter, mysteriously, from 'Live and Let
Live' which gives some of their flavour: the meeting was 'numerous and
uproarious'; one was 'ejected by a policeman', and the conclusion that 'a
little knowledge and much assertion (usually combined) are very dangerous
things!. People had produced pamphlets - 'What's Up!' ... 'What a Lark!' ... 'What's
the Price?' - all good stuff for a teenage boy to take to heart.

Following the agitation in South London
the Surrey Consumers Company had been founded in Rotherhithe and soon after
acquired the works of the old Deptford Company. The Boards of both South Met.
and Phoenix Companies responded with lower prices and soon Surrey Consumers
were finding their guaranteed low prices difficult to maintain. Livesey quoted
John Thwaites 'I see competition is a failure' and soon districting agreements
had been informally finalised in South London.

In 1848 George Livesey became an
employee of the Company as 'the boy' and during this period the Company's
policy on pricing was hardening. Price reductions were announced at this time

South Met. was not only proud of its
pricing policy but of its 'efficiency' and technical innovation. Thomas
Livesey built gasholders by
direct labour, introduced canvassing for customers, and began to re-use
fireclay retorts. George Livesey as his father's assistant acted as Engineer in
the works and soon began to acquire a string of patents. Working with a local
firm of chemists. Hills of Deptford, he began a long series of experiments to
perfect a new method of purifying gas. This method ultimately failed but in the
process he gave several technical papers to the professional institute and made
his name as an engineer.

It was in the field of gasholder construction that
George Livesey really made his name - and in this way showed a grasp of
administrative application to technology which meant that it was used to its
best advantage. South Met. began to build bigger and bigger gas holders
culminating in the 1880s in the giant gasholders still to be seen at East
Greenwich. Livesey explained that such holders are more economical because by
storing gas in giant amounts in the air the amount of expensive land used was
reduced. In the same way gasholders could be used to store gas over the weekend
and thus cut down on Sunday working with all its difficulties.

Journal of Gas Lighting was rather
cynical about Livesey's technical prowess: 'the paper contains several
declarations of principle and a scarcity of theoretical knowledge'. but it was
this ability to grasp the wider problems of manufacture which made South Met
the premier company that it became under the Liveseys.

In evidence to various Commissions of
Enquiry, and Select Committees, George Livesey was at pains to explain the
financial reasons for many of his Company's actions. Always clear:, they are a
vivid illustration of the administrative means and the thought that went into
South Met.'s policies. Policies formulated in the 1850s were designed with an
eye to the future. A vivid illustration of this is in districting policy.
Thomas Livesey was reported as having fought street by street for as large a
growing suburban area as possible. This was a big factor in making the Company so
successful in the 1880s and 1890s.

The massive increase in housing in South
London meant that sales of gas rose dramatically. At the same time the
expensive investment in mains had already been made and new customers could be
connected quickly and efficiently Profit could be quickly maximised. It was
the foresight of Thomas Livesey and the South Met.'s Chairman which had laid
the groundwork for this enormous expansion. The Chairman in the 1850s was yet
another member of the Foster family.

In the 1850s the Board were not
themselves local men - while some may have had country homes in South London
they were mostly from the City and none of them had addresses in South East
London - Peckham or Camberwell. The Livesey's did however become identified
with the area which the works supplied. Thomas Livesey, once he had moved to
South London, never moved out. From the cottage in Canal Grove near the works he moved to
Consort Road in Peckham and from there to Dulwich. He served as a member of
Camberwell Vestry; was a local churchwarden and a supporter of local schools.

George lived in Peckham and in Denmark
Hill but, at his official retirement, moved to Reigate. He continued with his
father's tradition of local involvement and good works - he supported local
churches and temperance organisations and in 1889 gave a library to Camberwell
vestry. Sited opposite the Old Kent Road works this was naturally well stocked
with works on gas technology but it was as a point of principle to be a free
library for the working classes of Camberwell, who, Livesey thought, had
'strong claims on a library'. The Livesey family claimed to know and understand
South London and part of what George Livesey said when he put forward arguments
in favour of co-partnership was that he knew and understood the men who worked
for South Met; that he understood their culture and environment .

Thomas Livesey deferred to the Board and
followed their instructions in every way. When he was offered a Directorship of
the neighbouring Crystal Palace Company he turned it down on the Board's
instructions. It. was said of George Livesey that this incident determined him
not to be so directed by the Board. When his father was told not to become a
Crystal Palace Company director, George Livesey immediately began to hope for.
a directorship of that Company for himself - which in due course he was offered
and accepted. In George Livesey’s early years as manager of South Met. at Old
Kent Road he frequently quarrelled with the Board on policy matters and carried
on the battle until he won.

Livesey's first public dispute with the
Board concerned his evidence, against South Met.’s policy, to the Select
committee of 1875 on the subject of the sliding scale. Livesey claimed that he
had been forced to give this evidence by the Board of Trade. The incident also
gives some indication of George Livesey’s standing at that time as the manager
of a relatively small and obscure works in post for only four years. This
demonstrates the way in which George Livesey had become the pacesetter in
regard to his aging Board. He was pushing policies to their logical conclusions
which had long been laid by the Board and was prepared to use the power of
shareholders meetings to change Board policies, which he did not like.

The 1870s saw South Met.’s management
expanding and innovating: company meetings often involved major confrontations
between Livesey as Company Secretary and Board members. As Company Engineer he
was an employee and could have been dismissed; as Company Secretary he was
elected by the shareholders - and Livesey was sometimes accused from the
platform of having packed meetings with employees.

The 1872 Gasworkers strike was a factor
which helped to consolidate Livesey's position at South Met. Alone in London
South Met. workers did not strike: Livesey claimed thereafter that the reason
for this was that he 'understood' the workforce and that this had diverted
strike action. This claim will be discussed later.

As South Met. expanded so Livesey began
to push efficiency as the reason for this success. Throughout the period of the
1870s he gave numerous papers on various subjects to professional bodies in the
gas industry. To start with these papers were on technical subjects but
gradually they took on matters more related to administration and in due course
to worker relations. In Livesey's year as Chairman of the Institute of Gas
Engineers, 1876, he made several speeches of an overtly political nature. The
message throughout these papers is cost effectiveness and efficiency - but in
so far as worker relationships are concerned these must be tempered by allowing
workers some rights, like that of worship on a Sunday and that this in turn
will give the worker the commitment to the Company to work in a more positive
way.

In the course of the amalgamations with
Surrey Consumers, the Phoenix Company and the two Woolwich Companies, Livesey
retired from his employment with the Company. Once the presentations to himself
and his wife at the various 'works were over he took up a place on the Board.
Within six months he was Chairman and from then on his career continued without
the restraints imposed by being an employee - but nonetheless still in
opposition to many on the existing Board. This Board was now greatly enlarged
and augumented with members from the other constituent companies. In South
Met.'s name he began to champion a number of political causes. One of these was
the abolition of the coal taxes. At that time all coal which came into London
was taxed and obviously for the gas companies whose main raw material it was
these were a burden they did not want. Livesey argued that prices could fall if
the tax was lifted and that this was the only sensible course. He argued that
tax was collected by local authorities who then paid it back to him in the form
of increased prices higher than they need be because of the tax. South Met. was
however the only company pledged to lower its prices should coal taxes be
abolished.

In 1889 this cause took him directly
into the political arena when all candidates for the LCC were lobbied on this
issue. The same battle was carried on against rates - rates in Livesey.s
arguments were yet another local tax pushing up gas prices to the ratepayer.
South Met. made a policy of opposing all rating assessments and Livesey
appeared at hearings to argue that since South Met. was a partnership of
consumers and company under the sliding scale that rates were then an
unnecessary bureaucratic procedure. After the formation of the Metropolitan
Boroughs in 1894 Livesey carried this campaign even further and it eventually
led him to a personal involvement with the. Municipal Reform Society in the
1900s.

Increasingly throughout the 1880s and 1890s he turned his
attacks towards the other major London gas company: Gas Light and Coke Co.
Livesey began a major campaign of criticism against every aspect of their
management and policy. As a shareholder he began to turn up to their Company
meetings to make long and detailed speeches on most aspects of their work and
would claim to demonstrate changes, which would lead to economies. This was
augumented by letters to the press and by political lobbying.

By 1889 at the time of the Gas Workers
strike this quarrel was at its height. A dispute had arisen between the two
companies over the supply of gas to the Nine Elms Goods Yard. The Railway
Company had taken advantage of South Met's lower prices to get their supply of
gas from them but most of the premises lay in the area of Gas Light and Coke's
agreed supply. The case eventually went to the House of Lords and despite previous
judgements in favour of South Met. damages were awarded to Gas Light and Coke
Co.

During the period of the 1889 strike
South Met. were being pressed by Gas Light and Coke for payment of these
damages and relations were very bad indeed. This incident is only important in
that it illustrates how far Livesey was prepared to go in order to prove that
the gas industry could supply gas in a way that was not against the public
interest. To do so he had broken up any form of

Another source of friction in the London
gas industry in 1889 was the situation which had given rise to the break up of
the professional institute. A scandal had grown out of the 1883 Crystal Palace
Gas Exhibition. Even before the exhibition had been
held certain appliance manufacturers had accused him of partiality towards
others . This became a major row led by an appliance manufacturer called
George Bray. Bray attacked Livesey through the professional institute and also
in the pages of the gas press - some issues of Gas World have four and five
page articles against Livesey. An underlying cause of the attack seems to have
been the suspicion by some provincial gas men that the Institute was being run
by a small group of Londoners 'the London coterie' ' - in fact Livesey and his
associates. An argument developed round the issue of whether appliance
manufacturers should be allowed into the professional body. The eventual
outcome followed High Court actions and accusations of masonic inspired deals –
Livesey resigned along with the 'coterie' and a rival professional body was
formed.

Linked to sales of gas through meters
and the push in gas sales was the positive involvement of the workforce. It is
here that policies of expansion and technogical advance interface with
co-partnership. As sales of gas to the public increased, the Company needed
more and more to have an acceptable public face. Large numbers of employees
were used outside the works and directly involved with the public; these
workers must be totally loyal to the company in order to promote a favourable
Company image. Co-partnership was the means of buying this loyalty. Allied to
this was a positive policy of encouragement to all workers to become gas
salesmen among their friends and relations. Workers were offered a bonus for
new customers and any appliances sold through them earned commissions.

George Livesey talked a lot about partnership in
relation to the sliding scale. Perhaps the biggest move that South Met. made in
this direction during the 1880s was in the policies of share sales to
consumers. Legislation required gas companies to offer new stock for sale only
through tender or by auction and South Met. varied this policy in that tender
notices were deliberately excluded from the financial and business press and
instead put into the local papers. Invitations to buy were sent out with gas
bills and notices sent out by the Company. Figures for the amount of company
stock sold in this way are not available but nevertheless it was a positive
plank in Livesey' arguments that the public were partners in the company under
the sliding scale and one in which he could easily extend to share sales to
company employees.